VMware Cloud Director 10.x
This issue is caused due to the VM's not being connected to a network that is owned by a Data Centre Group. If the VM's are not connected to a network owned by a Data Centre group they will not have a System tag that contains the Organization VDC ID in NSX and therefore the VM's will not be visible when you select the associated VM's in the dynamic security group.
This issue is resolved by using networks that are owned by a Data Centre Group.
To Verify what networks are owned by a Data Centre Group and have a System VDC tag associated in NSX follow the steps below:
Note: The System tag cannot be removed unless all VM's have been disconnected from the network that is owned by the Data Centre Group